Smartmatic Employees (And Others) Criminally Charged In Connection With Bribery Schemes In The Philippines
The DOJ recently announced that a “federal grand jury in the Southern District of Florida returned an indictment … charging three executives of an election voting machine and service provider company and a former Chairman of the Commission on Elections (COMELEC) of the Republic of the Philippines for their roles in an alleged bribery and money laundering scheme to retain and obtain business related to the 2016 Philippine elections. […] These bribes were allegedly paid to obtain and retain business related to providing voting machines and election services for the 2016 Philippine elections and to secure payments on the contracts, including the release of value added tax payments.”
Although not mentioned in the indictment, the company at issue is Smartmatic (and related entities).
Brazilian Company Bribes Brazilian Officials, U.S. Collects Net $155 Million In FCPA Enforcement Action
This recent post posed the question of whether “foreign” in the FCPA’s “foreign official” element means as it relates to the U.S. or as it relates to the specific company at issue. The post highlighted how in recent years the FCPA enforcement agencies have adopted the former interpretation in bringing FCPA enforcement actions against foreign companies for allegedly bribing their own “domestic” officials – but “foreign” as it relates to the U.S.
In yet another example, the DOJ and SEC announced yesterday (see here and here) that J&F Investimentos S.A. (J&F a private investment holding company based in Brazil that owns approximately 250 companies primarily involved in the meat and agriculture business) and a related entity resolved a net $155 million FCPA enforcement action for allegedly bribing Brazilian officials.
The enforcement action involved a: (i) DOJ component against J&F resolved through a plea agreement in which the company paid net $128.2 million; and (ii) an SEC component against J&F, a related entity, and two individuals in which the related entity paid approximately $26.8 million and the two individuals each paid a $550,000 civil penalty.
Individual Enforcement Actions In Connection With Sargeant Marine Matter Span Several Years
[Just when you think 2020 can’t get any more strange, there were no SEC FCPA enforcement actions during the final days of September. Why is this strange? Because as highlighted in this prior post, approximately 15% of SEC FCPA enforcement actions in recent years have occurred during the last week of September. This was the first year since 2014 that there was not an SEC FCPA enforcement action in the final days prior to the SEC’s fiscal year ending on September 30th. COVID-19 related? Perhaps, but through three quarters thus far in 2020 FCPA enforcement has been generally consistent with prior years numbers].
Prior posts here and here highlighted the DOJ’s recent Foreign Corrupt Practices Act enforcement action against Sargeant Marine (SMI) in connection with bribery schemes in Brazil, Venezuela, and Ecuador.
This post highlights the related individual actions against seven individuals (five individuals for FCPA offenses and two alleged foreign officials for money laundering). What is interesting is that there were no individual charges in connection with the Ecuador conduct alleged in the SMI enforcement action and that the individual action began in September 2017 – a full three years prior to the SMI enforcement action.
DOJ Criminally Charges Former Braskem CEO Jose Grubisich In Connection With The Same Core Conduct Alleged In The 2016 Corporate Enforcement Action
As highlighted in this prior post, in late 2016 the DOJ and SEC brought a Foreign Corrupt Practices Act enforcement action against Odebrecht S.A. (a Brazilian holding company) and Braskem S.A. (a Brazil-based petrochemical company with shares traded on the NYSE in which Odebrecht owned a majority of voting shares).
The conduct at issue was egregious and largely centered on a business unit, the Division of Structured Operations, housed within an Odebrecht subsidiary that allegedly served as little more than a bribe-paying department for the benefit of Odebrecht and Braskem. According to the resolution documents, former senior executives authorized approximately $788 million in bribes, largely through the Division of Structured Operations, to alleged foreign officials in at least twelve countries. While the principal focus of the DOJ’s action (and the exclusive focus of the SEC action) concerned conduct in Brazil including the companies relationships with Petrobras, the DOJ action also alleges improper payments in Angola, Argentina, Brazil, Colombia, Dominican Republic, Ecuador, Guatemala, Mexico, Mozambique, Panama, Peru, and Venezuela.
Former Herbalife China Executives Criminally Charged By DOJ, SEC Also Charges Former Executive
In 2014, Avon resolved a Foreign Corrupt Practices Act enforcement based in large part on obtaining a direct selling permit in China. (See here for the prior post).
In 2016, Nu Skin Enterprises resolved an FCPA enforcement action based in large part on obtaining a direct selling permit in China. (See here for the prior post).
In 2017, Herbalife disclosed that it was under FCPA scrutiny concerning its conduct in China. With the company’s scrutiny still pending, yesterday the DOJ announced that Yanliang Li (a citizen of China and former Managing Director of a Chinese division of Herbalife) and Hongwei Yang (a citizen of China and former head the External Affairs Department of a Chinese division of Herbalife) were criminally charged “for their roles in a scheme to violate the anti-bribery and the internal controls provisions of the FCPA.” Not surprisingly, the alleged conduct focused on obtaining a direct selling permit.